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Merkel meets new Greek Prime Minister: Mitsotakis asks for investment, not for favors

2019-08-29T07:52:21.106Z


For the first time since the end of the rescue packages, a Greek head of government meets the Chancellor. Kyriakos Mitsotakis presents himself in Berlin as a reformer - a relaxation of austerity measures, he does not want to ask for now.



Little time? At the end of the text there is a summary.

A new experience for Angela Merkel: Kyriakos Mitsotakis will be the first Greek Prime Minister since the beginning of the debt crisis, who does not ask the Chancellor for help or benevolent intervention during his visit to Berlin.

The message coming from the camp of the recently elected conservative head of government bears witness to a new level of self-confidence in Athens. At the meeting with Merkel on Thursday afternoon - the first between the Chancellor and a Greek Prime Minister after the end of the last euro rescue package - Mitsotakis wants to be perceived as head of government of a country that is no longer dependent on the generosity of its partners.

From the outlaw to the prodigy

Until recently, Greece was considered the problem child of Europe. However, Mitsotakis believes that his country has now become an oasis of political stability and solid economic potential. And this at a time when Europe faces several major challenges, from the risk of a recession and the prospect of a hard Brexit to the political turmoil in Italy and the global impact of the US-China trade war.

For Greece it actually looks good:

  • The economy is growing.
  • The country, not so long ago an outlaw on the bond market, now gets cheaper loans than the US.
  • The Athens stock market has the best performance in Europe so far this year.
  • And earlier this week Mitsotakis announced the abolition of all remaining capital controls. That, too, is a sign that the country is returning to normal, the current buzzword in government circles.

Relaxation of the austerity measures must wait

That awakens trust. In order not to spoil the mood at the meeting with the Chancellor Mitsotakis will avoid a topic in Berlin nevertheless: renegotiations over the prescription of the rescue operation, which its predecessor Alexis Tsipras had negotiated.

Athens had agreed in 2015 to reach an annual budget surplus of 3.5 percent by 2022 and to keep the budget higher for decades thereafter. One of Mitsotakis' key campaign promises was to reduce this target. He believes that greater fiscal space could boost the economy. And at the same time give him the opportunity to keep his promises of lower spending and tax cuts - and tackle unemployment, which remains the highest in Europe.

However, EU lenders are reluctant to lower agreed targets. Finally, it should be ensured by the requirements that Greece can reduce its enormous debt mountain in the long term - without the need for further financial aid from EU partners.

From the opposition, Mitsotakis was criticized for dropping the topic off the agenda. In doing so, the Prime Minister continues to adhere to his election pledge to renegotiate the terms of the rescue deal. Nevertheless, he sees good reasons for not addressing the issue in Berlin for the time being.

Mitsotakis has an eye on Merkel's domestic problems

Mitsotakis told SPIEGEL even before his election victory on 7 July that he wanted to gain the confidence of the other EU governments first. He wants to achieve this by implementing courageous reforms and an investment program. Only then he wanted to ask for more room. First of all, he wants to assure the Chancellor that Greece is fully fulfilling its obligations in the current and next year. Only at a later date Mitsotakis wants to work to reduce the surpluses from 2021 onwards.

Also, the newly elected Prime Minister has learned from his predecessor that Merkel gives little to promises of reform. The Chancellor wants to see tangible evidence. Mitsotakis is aware that any attempt to solicit lower budget requirements would currently be politely rejected. Especially since his demands depend on bringing the economy on a strong growth path. Greece is by no means immune to turbulence in the global economy. If Europe falls into recession, it would also affect exports and tourism in Greece. And that in turn would weaken Mitsotakis' arguments.

And finally, Mitsotakis also has an eye on Merkel's domestic problems. In view of the impending recession and the possible CDU defeats in the upcoming state elections in Brandenburg, Saxony and Thuringia, the Prime Minister wants to prevent Greece from becoming a campaign issue in Germany.

Mitsotakis does not only want to present himself as a convincing reformer and show the image of a new, strong Greece. He also wants to discuss future investment opportunities, especially in the energy sector. He is expected to vigorously promote German companies.

Migration is high on the agenda

At the very top of the agenda is also the European refugee policy - or its absence. It is assumed that Mitsotakis will be accompanied to Berlin not only by his Minister of Finance but also by Minister for Migration Policy Giorgos Koumoutsakos.

In many parts of Europe, refugee policy has taken a back seat, but Greece is currently facing well-known problems. Again, more people arrive from Turkey on the Greek islands of the Aegean and the hotspots are threatened with collapse again.

Athens suspects that Turkey has relaxed its border controls in order to put pressure on the drilling activity in the Eastern Mediterranean. The preliminary work for the talks in Berlin has already been done. Last week German migration experts met with Greek officials to deepen cooperation between the two countries on migration issues.

In summary: After long years of crisis, things are looking good for Greece: the economy is growing, the country is again getting cheap loans in the bond market. The new Prime Minister Kyriakos Mitsotakis thus presents himself with confidence to Chancellor Merkel. A sensitive issue between Athens and Berlin: Greece pledged to the EU lenders to reach an annual budget surplus of 3.5 percent by 2022 and to keep the budget higher for decades thereafter. One of Mitsotakis' key campaign promises was to reduce this target. He believes that greater fiscal space could boost the economy. First, however, it is important to gain the trust of other Europeans.

Source: spiegel

All news articles on 2019-08-29

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